The Pitcairn Family Heritage Fund Harvard Case Solution & Analysis

1. Would you invest in this fund? Think of at least three reasons why you would or would not.

By taking account of the facts of the case, it can be mentioned that Pitcairn has performed quite well in the past and it has the ability to remain successful for a long term. Hence, the increase in the funds of the company for a long span of time is a positive sign if the investors are going to make an investment in the company.

However, it is also worth mentioning that the funds of family heritage investments have the ability to generate returns at a rate of almost 9.47%. In addition to this, the company also has a four star rating as well due to the increased growth in the cash flows of this company.

Nonetheless, from the point of view of investor there may be several reasons that he would like to make an investment in this company of not. Hence, the first reason, which is worth mentioning will be based upon Pitcairn’s ability in order to continue making the payment of dividends to the investors who have made huge contributions into the company.

Hence, the ultimate reason behind any investor who is making investment will depend upon the higher rate of return that will be needed by the shareholders. Despite this, the second reason that an investor may go towards making an investment in this company will be due to its past record and the goodwill that it has made and this can also be recognized by taking account of the four stars rating due to the five year risk adjusted return.

Moreover, even if the past record of the company was outstanding, the investors will have to discuss the matter with the senior personnel and after agreeing on a single decision, the investment in the fund can become worthwhile. As a result,this will lead to improving the image of Pitcairn among the rest of the companies.

In addition to this, the third reason that is worth mentioning for making an investment of the availability of competent and knowledgeable staff at Pitcairn is that they will have the ability to make an efficient use of the investments that are made by the investors.

Hence, this will result in increasing the returns for the shareholders as well as Pitcairn’s going concern status could also be protected in the future. Despite this, there may also be some reasons behind not going for making an investment in this company as it is evident that the company was facing problems in a fiscal year of 2005 and 2006.

The Pitcairn Family Heritage Fund Case Solution

Therefore, the funds ofPitcairn performed below the benchmark that was set by this heritage fund and this may lead to be the first reason that the investor will not go for making an investment in this heritage fund.

Secondly, the other reason behind not making an investment in the fund will depend upon the fact that if Touchstone is not going to play an advisory role in making the existing position of family heritage better in the long run.

Moreover, the third reason of not making an investment in the funds of Pitcairn may be the fall in a stock price of Pitcairn’s shares in the future which may result in providing the investors with low and unexpected returns.

2. Analyze the performance of Pitcairn’s portfolio companies using the spread sheet.

By taking into consideration the workings that have been performed on the excel,it show that in the previous years Pitcairn was able to perform on outstanding basis and this is evident by taking account of the annualized return since the fiscal year of 1996.

On the other hand, the risk adjusted performance takes account in relation to the S&P 500.In addition to this,it is showing an increase but the sharp ratio is showing a decrease. The raw returns as per the exhibits are showing a fluctuating trend. But the increase in number of stock of Pitcairn will result in the favor the long term funds.

However, the excess returns are decreasing and the company may not be able to generate sufficient returns for the shareholders and this may result in the dissatisfaction of the shareholders. Nonetheless, there may be chances that the company is going to make its position better in the future by devising certain strategies that are in the favor of the shareholder as well as the Pitcairn heritage..........................

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